The understatement of the ending inventory balance causes:
1 answer:
You might be interested in
When the price rises from P1 to P2, consumer surplus decreases by an amount equal to B + C.
Consumer surplus, also known as buyers' surplus, refers to an economic measurement of consumer advantages that arises from market competition. It occurs when the actual price for a product or service that consumers are paying is less than the price, they are willing to pay. The changes in price affect the consumer surplus, as consumer surplus always increases as the price of a good or service decreases, and decreases as the price of a good or service increase. Visually, it is illustrated by economists as the area under the demand curve between the market price and what consumers would be willing to pay. In this case, that is represented by sum of B and C.
Note: The question is incomplete. It does not contain the figure (which is attached).
Learn more about Consumer surplus:
#SPJ4
Answer:
a. 0.4840 percentage points
b. Project is overvalued
c. Required return from the portfolio would increase.
Explanation:
Note: The full question is attached as picture
New Allocation on Transfer Fuels corporation = 30%+35%
New Allocation on Transfer Fuels corporation = 65%
Beta after the new allocation = (20%*1.50) + (15%*1.10) + (65%*0.5)
Beta after the new allocation = 0.3 + 0.165 + 0.325
Beta after the new allocation = 0.79
New Required rate = Risk free rate + Beta* Market risk premium
New Required rate = 4%+ 0.79*5.5%
New Required rate = 4% + 4.345%
New Required rate = 8.345%
Hence, the change in required rate = 8.829% - 8.345% = 0.4840% . In this case, the project is overvalued if Brandon expects 6.85% . If Higher beta is chosen the portfolio risk would increase and required return from the portfolio would increase.
